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Trump's Pharma Tariffs Threaten Switzerland's Economy

Trump's tariffs target Switzerland's pharma industry, which contributes heavily to its GDP and exports. While big players like Roche and Novartis may invest in the US to avoid tariffs, smaller companies could still be hit hard.

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2 min read
There is a pharmacy store and there is a vehicle in front of it and there is a building in the left...
There is a pharmacy store and there is a vehicle in front of it and there is a building in the left corner.

Trump's Pharma Tariffs Threaten Switzerland's Economy

US President Donald Trump's announcement of a 100-percent tariff on branded pharmaceutical products from Switzerland has sparked concern in the European nation, home to global giants like Roche and Novartis. The potential impact on Switzerland's economy is significant, given the pharmaceutical sector's substantial contribution to its GDP and exports to the USA.

In 2024, Switzerland enjoyed a nearly 40-billion franc surplus in trade with the USA, with almost two-thirds originating from the pharma-chemical sector. However, the industry's future is now uncertain due to Trump's tariff threat. Even if Roche and Novartis are exempted, many smaller companies in Switzerland's pharmaceutical industry could still be affected.

The tariffs, set to take effect from Wednesday, could significantly disrupt Switzerland's economy. The pharmaceutical sector contributes around seven to eight percent of the country's GDP and exports roughly 50 percent of its products to the USA. While the impact remains unclear, according to Hans Gersbach of the KOF Swiss Economic Institute, a prolonged tariff could potentially trigger a recession in Switzerland if a substantial proportion of pharmaceutical exports to the USA are affected.

In response, Roche and Novartis have announced plans to invest tens of billions of dollars in the USA to potentially avoid the tariffs. Novartis has already launched a direct-to-patient platform in the USA, selling a discounted version of its Cosentyx drug for treating inflammatory conditions like psoriasis.

The USA's proposed tariffs on Swiss pharmaceutical products could have severe implications for Switzerland's economy. While major companies like Roche and Novartis may be exempt if they invest in USA production, smaller firms could still be affected. The situation remains uncertain, with the potential for a recession if exports to the USA are significantly impacted over an extended period.

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